Tuesday, October 26, 2010

GMG Global

GMG Global: Posted strong set of results for 3QFY10, with Rev at $110.4m up 115% YoY & 37% QoQ, while Net Income at $16.4m was a turnaround from the $371,696 loss YoY & up 37.8% QoQ. Strong performance attributed to a 23% YoY & 40% QoQ jump in rubber sales volume to 26,651ton and a 74.7% surge in ASP to $4,141/ton YoY, raising gross profit margins by 5.8% to 28.5%. Grp expects ASP for rubber to remain within the band of $3555-$4385/ton seen in 1H10, backed by strong global demand....

We note that current rubber prices already trades above grp’s targeted band at $5110/ton, which would contribute positively to its stellar rev and margins. 9mFY10 EPS currently at 0.84c, of which 50% was attributed by 3Q EPS of 0.43c. Annualizing 3Q’s EPS would see GMG trade at a compelling forward P/E of 18x, which is undemanding vs grp’s average of 30x.

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